A Significant Increase in Mortgage Applications Causes Delays in Pre-Approval Processes Leading to Buyers Missing out on Properties

Allsopp & Allsopp report that an increased amount of mortgage applications is causing the pre-approval process to take up to ten days longer than usual, and in some cases, leading to buyers missing out on properties.  

The leading real estate brokerage reported a 40% increase in mortgage transactions in Q3 2020 compared to Q3 2019. 

Stuart Roe, Head of Mortgages at Allsopp & Allsopp says “There has been a lot of change in 2020 and businesses, including banks, have had to make adjustments in the way they operate with some banks adopting a work from home approach for certain departments.

Whilst bank employees adapt to their new ways of working, an increasing amount of mortgage applications are being made - a record number for Allsopp & Allsopp. These factors combined have had an impact on the length of the process of getting a pre-approval and in some cases, the final mortgage approval.”

A number of UAE banks are airing caution when it comes to issuing mortgages as a result of an uncertainty clouding employment of certain applicants.

Roe explains “It will come as no surprise that banks are treading carefully when it comes to lending because of the turbulent economic climate surrounding certain industries such as; aviation, hospitality and construction. This is not to say that buyers working in these industries will not get a mortgage, but it may take longer as banks are working meticulously to ensure that their assets are protected when lending.”

Allsopp & Allsopp transacted 50% more sales and had 95% more enquiries from clients looking to buy in Q3 2020 compared to Q3 2019. The increase in Loan to Value (LTV) introduced by the UAE Government as part of the stimulus package, has encouraged many more buyers into the market. 

Stuart Roe says “The LTV teamed with the lower interest rates and attractive property prices have enticed many buyers into the market who, last year, hadn't thought it possible to own a property of their own in the UAE. Many of these buyers head straight to the bank to find out if they are eligible for the 80% mortgage or go viewing properties in the hope they are eligible to only end up getting their pre-approval denied after signing contracts. 

An initial 10 minute conversation will allow a well versed mortgage broker to be able to advise on the likelihood of meeting the mortgage expectations that you have, as well as being able to give comparable mortgage options from across the market based on your personal profile. In some cases, buyers are surprised to hear they qualify for higher loan amounts and can stretch to bigger homes given the pricing and low interest rates available that were out of reach to them previously. A mortgage advisor will be able to give a clear outline of what is achievable.”

A delay in mortgage pre-approvals, in some instances, means buyers are missing out on properties.

Roe explains “Some buyers are viewing homes based on the hope that their mortgage pre-approval will be ready soon and are getting their hearts set on properties, only to miss out as the market is moving fast and the mortgage pre-approval process is being delayed. My advice to buyers would be to talk to a mortgage broker at the start of their property search. They will then be in a clear position of their financial capabilities and be able to get their pre-approval in place at the beginning of their property search journey. Any offers they then make will be enhanced, especially when more than one party is interested in the property, by the fact the pre-approval is in place and they won’t have the same risk level of missing out due to delays in the mortgage process.”

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